Petrobras Ready To Sell Troubled US Refinery

Petrobras is preparing to launch a tender for its 110,000-bpd refinery in Pasadena, Texas, the company said this week. The facility has become notorious as it was an object of investigation as part of Operation Car Wash, which looked into graft practices linking former president Dilma Rousseff, various political parties, and major Brazilian companies—notably Petrobras.

The Pasadena refinery attracted the investigators’ attention as prosecutors and auditors believed the purchase of the facility in 2006 had involved bribes being paid to Petrobras executives. The suspicions very likely had to do with the fact that Petrobras paid US$360 million to acquire 50 percent in the refinery, while its previous owner, Belgian Astra Oil, had bought the stake for only an eighth of that only a year earlier.

Over the next six years, Reuters recalls, Petrobras splashed as much as US$1.2 billion on the refinery, including on the acquisition of the remaining 50 percent from Astra Oil, after a legal dispute. According to a Brazilian audit court, the acquisition of the Pasadena facility had cost Petrobras more than US$580 million in losses. Brazilian prosecutors charged 11 former executives from the company who were involved in the Pasadena deal with corruption and money laundering in December.

A couple of days ago, Petrobras announced another tender, for its 50-percent stake in biofuels producing company BSBIOS. The sales are part of Petrobras’ asset sale program aimed at reducing its massive debt pile, which is still the highest in the oil industry at over US$100 billion. The company plans to amortize some US$8 billion this year and next, Petrobras said earlier this week. It also eyes a net debt-to-EBITDA ratio of 2.5 this year, compared with 5.3 for 2015.

Higher oil prices should also help, coupled with record-high oil production rates over the last four years, as reported by the company in January.